Intellectual Property Insurance: Why You Should Consider It

Every business has intellectual property (IP), which is oftentimes their most valuable asset. Many high-profile cases have brought IP insurance coverage to the spotlight. Intellectual property insurance is there to safeguard your business, whether small or large, as well as inventors, if you are sued for infringement by another business. In other words, someone takes your idea elsewhere.

We live in the greatest era for innovation the world has ever known. The opportunities are there, but with innovation also comes risk and conflict. Due to the rising costs of litigation and as they become more frequent, an intellectual property lawsuit may cause your company to go out of business in no time. A recent report estimates insurance litigation rose 29% with thousands of cases linked to IP issues.

Some specific industries have a higher likelihood of being involved in a lawsuit. For instance, pharmaceutical companies are first on the list, then key technologies. Why? These industries involve huge profits. It’s common for larger companies to take advantage of smaller companies by throwing them into the litigation process. If you have the right tools, you can protect your business. While conflict is unavoidable, what you do with it in a courtroom is what really matters.

There is a common problem with the United States Patent and Trademark Office (USPTO) and the way they keep their applications hidden, which makes infringement more probable. Also, defendants are responsible for paying their legal costs, which can be high, and the losses even greater. Awards issued by the court include, among other things, attorney fees, royalties, lost profits, punitive enhancement, and interest assessments.

Why Should You Consider Intellectual Property Insurance?

CEOs categorize intellectual property management as one of their top three risks since intellectual property is considered one of the most valuable assets – as much as 80% of total value in most businesses. It’s what allows a business to operate, and it includes trademarks, patents, trade secrets, copyrights, advertisement, marketing, and product packaging. Unfortunately, many companies don’t realize they are at risk.

Addressing an Insurance Gap

It’s very rare for risk managers to get involved in evaluating or managing risks linked to IP, so questions as to whether these issues should be insured are not considered. Also, companies are under the assumption that general liability insurance covers the common IP risks and exposures.

When evaluating and buying an IP policy, it’s crucial you speak with a knowledgeable broker familiar with the product who understand the scope of coverage. Whether you are looking to protect your business against a frivolous lawsuit, to prevent lawsuits from happening, or to protect market share, make sure you get intellectual property insurance today.   

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